A.Define the Term Sales Cycle

MM 2.01

Objective A:

a.Define the term sales cycle.

A salescycle is the time from when a salesperson first makes contact with a prospect to the moment when a sale is made or finalized.

The sales cycle is the sequence of phases that a typical customer goes through when deciding to buy something. As a rule, the sales cycle is described from the customer's perspective. The first phase of the sales cycle may be either the customer's perception of a product, or a perception of a need that the product might satisfy. The following steps include research and evaluation; the last step is the customer's decision to purchase the product.

7 steps

1. Prospect for Leads

2. Set an Appointment

3. Qualify the Prospect

The idea is to confirm that your prospect is both able and potentially willing to buy your product.

4. Make Your Presentation

5. Address the Prospect's Objections

6. Close the Sale

7. Ask for Referrals

Example 1: Time kills deals. The speed at which a prospect is converted into a customer and the number of prospects required to make that conversion determines your sales cycle efficiency. So ask yourself, are you taking the right steps to measure and reduce lost sales?

Example 2: Accelerate your sales cycle by allowing teams to capture, maintain and continually improve their selling content, and automatically customize it for use in communicating with prospects.

b.Discuss factors that affect the length of sales cycles.

Go for the warmed-up clients, aka referrals. You've got built-in credibility because the referral trusts the work you've done for other clients. "When an existing customer says, 'Take the salesperson's call,' you've really shortened the time it takes to sell," she says. Schreier-Fleming encourages reps to meet their customers in informal settings such as trade organizations or in a volunteer capacity. This tactic will help abbreviate the sales cycle because people are more likely to buy from, and recommend, known vendors.

Example: James Feldman, president and CEO of lames Feldman Associates Inc., a performance improvement agency in Chicago, first worked with Toyota 25 years ago. His experience with Toyota impressed McDonald's, then Microsoft.

The length of your sales cycle is another major component in time or self management. The longer the sales cycle for your product or service, the more complex contacts you have to keep organized, the more paperwork and correspondence, the more frequent the travel, the more detailed the management of the account, the more important time management becomes.

How to lengthen a sales cycle:

Our increasing focus on enterprise customers may lengthen our sales cycles, which may delay sales beyond forecasted quarters and increase fluctuations in our financial results.

Just as in war, the longer your supply line becomes, the more vulnerable you become. In short, when you have an extremely long sales cycle, the more potentially volatile your lack of time management skills can be.

The paradox is that with a long sales cycle, it appears as if everything is easy to manage. Well, the opposite is really true. The result -- we get lulled into believing that length of time equals relaxation. Wrong, the culprit, short-term vs. long-term thinking.

Time zones can be misleading. Calling across the International Date Line can be even worse. Traveling across it is even more disconcerting. Dealing with international trade regulations can be almost impossible. And dealing with cultural differences is a real barrier.

The type of product or service that you sell is also a critical factor to this whole issue. For example, some products allow the salesperson to make the sale and immediately move to another prospect. Others dictate that the salesperson not only sell, but install, service, and provide ongoing support services while others require not only sales and support but extensive travel and ongoing penetration, prospecting, and in-depth selling. In short -- retention marketing. The result -- a myriad of time management skills that are specific to that person's unique selling situation.

Sales knowledge – combined with selling document and presentation automations technologies – improve the performance of all sales team members, includingthe newest team members.

c.Describe the advantages/disadvantages of short sales cycles.

Disadvantages

Short Sales Cycle is more compressed and fast-paced travel, but has frequent presentations, and must be carefully orchestrated. Short Sales have quicker delivery systems, but more complex contacts you have to keep organized, more paperwork and correspondence.

In short, when you have an extremely long sales cycle, the more potentially volatile your lack of time management skills can be.

Advantages:

In a short sales cycle, you can get a lot of quick hits. A person makes a decision right away and there are no barriers or issues to hold them back

By shortening the sales cycles, the sales people are therefore able to focus their time on serious prospects

A shorter sales cycle can generate revenues quickly, thereby ensuring that the startup does not go bankrupt.

d.Discuss the advantages/disadvantages of long sales cycles.

Disadvantages:

Consider some hypothetical math: It takes you three months to close a $50,000 deal. If you can manage to whittle that window down to a mere eight weeks, presto!--you've just padded your P&L by $100,000 per year. -
(You make less money, in more time.)

If you spend more than 90 days on any sales effort, you're wasting time. There are specific times during which companies buy for the year. If you're trying to sell to them at the wrong time or after they've made the annual purchase, then you are wasting precious time. -

The longer the time between critical activity (sales) and results (pay), the easier it is to lose sight of the direct relationship between time use and income. The result, is a loss of income, potential opportunities and perhaps, ultimately, even a job.

The length of your sales cycle is another major component in time or self management. The longer the sales cycle for your product or service, the more complex contacts you have to keep organized, the more paperwork and correspondence, the more frequent the travel, the more detailed the management of the account, the more important time management becomes.

But if your sales cycle is long, then there are lots of opportunities for me to change my mind, look at other people, or generally stretch it out even more.

Advantages:

Longer sales cycle, gives time to get to know the customer, and spend time educating them about the benefits and uses of the product.

Longer sales cycle, the pace can be adjusted depending on the individual client you are dealing with. Some clients like to have a lot of information about a product right up front, are knowledgeable, and have a lot of technical questions.

In a long sales cycle, messages need to be more informative and detail-driven. Rarely is a product or service with a long sales cycle considered by itself – it is generally being reviewed next to its competitors. With that in mind, the easier it is for the client to get information about the product or service the more likely they will favor it.

A longsalescycle can be deadly if you don't have supplemental early sales in your sales funnel to fill in.

Long sale cycle

Advantages:

-Longer time to make decisions

-Helps the sales process reach perfection

Disadvantages:

-bothBusinesses are losing productivity

-both businesses are losing money the longer they take time to make a decision

-Longer sales usually happen because representatives make an error in advancing to the next sales step (miscommunication)

e.Describe actions salespeople can take to shorten the sales cycle.

Time is not on the side of the rep and that’s why we need to discover steps to shorten the sales cycle. Here are a few steps to a shorter sales cycle I’d like you to consider.

Start the sales process with a decision maker and not a committee or recommender. Once you have the support of a decision maker, all other entities fall into line and the process moves faster. Speed is at the heart of a shorter sales cycle.

Understand the decision making process. Know how the decision will be made, who will be involved and what criteria will be evaluated. This information will help you streamline your sales strategies instead of jumping through meaningless hoops. Your focus on the things that matter to your prospect will lead to shorter sales cycle.

STEPS TO A SHORTER SALES CYCLE

(1.)Focus on the customer’s pain as well as the customer’s desire for gain. This goes beyond cost justifications and ROIs (RETURN ON INVESTMENT). Every day of delay cause another one hundred dollars to fly out the window. Even your prospect will call for a shorter sales cycle once they appreciate how much a delayed decision is costing them.

(2.)Longer sales cycles-- often happen when a rep incorrectly assumes they are ready to move on to the next step in the sales process. When the rep is wrong, the rep is forced to backtrack. By avoiding backtracking, you’ll generate a shorter sales cycle.

(3.)A shorter sales cycle-- will not only increase your productivity because you’ll be in position to sell more in a shorter period of time. A shorter sales cycle will also increase your productivity because you’ll improve your close rate.

Sources:

Shortening your sales cycle is one of the easiest and most efficient ways for an organization to

increase sales and simultaneously reduce the cost of sales.

Product and service performance is important to the sales cycle. The better aligned your

offerings are with customer expectations, the easier it is for customers to evaluate and make a

buying decision. Be brutally honest about the performance of your offering as compared with

competitive alternatives.

The bigger the sale, the longer the sales cycle will be. The size of

the deal will generally dictate the sales cycle time. Accelerate the sales cycle by helping your

customer prioritize, investigate, assess alternatives and plan for success. Timing is everything. Time

your sales process to the customer’s decision process for the fastest sales process. If the timing is off,

your sale will have to wait until the cycle comes around again…you missed the train and have to wait

for the next one.

f.Discuss actions salespeople take that lengthen the sales cycle.

1. Buyer/Seller Relationship

If the buyer and seller do not have a good communication, they cannot have a buyer/seller relationship.
2. Sales Call Planning

The most frequent mistake that salespeople make is the failure to have the right objectives for a sales call. Fixing this problem has an immediate effect on the performance of all salespeople.

3. Sales Questioning Skills
Only 14% of salespeople have well-developed questioning skills. Without knowing the best sales questions to ask, at the right time, the sale does not move forward and salespeople miss opportunities to deliver the highest quality service to the customer.
4. Sales Presentation Skills
When presentations aren't crisply focused on solutions to previously agreed upon needs, salespeople miss sales that should have been made.

5. Gaining Commitment
No sales call is successful unless the customer commits to take some action that will move the sales process forward. It is shocking to learn that only 38% of salespeople actually ask for commitment. Even fewer are able to handle stalls or objections.

Sales people and managers need to be patient. Everyone is under pressure to bring in revenue but panicking during the inevitable sales cycle will not improve results, in fact it will do quite the opposite. Constant reworking of your message, or changing the target list, or changing the sales team will greatly lengthen the sales cycle -- not reduce it.

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